A Guide to Running a Family Business | Sharlin Law

A Guide to Running a Family Business

Family Business

Employees are always advised to avoid workplace relationships. Yet, family businesses have existed for centuries. One could argue that family relationships are ones you cannot avoid, but there is a certain ironic overlap here worth exploring. A non-family business relationship is strictly business.

In a family business, interpersonal dynamics and emotional subjectivity are unavoidable. Owners of family businesses are inclined to run things as they see fit. Rules and guidelines are especially helpful in these situations.


Communicate honestly and openly with employees. There is no point in hiding the fact that you have relatives or friends working for you. It is not nepotism if it is a family business. That said, non-family employees need to feel included. Make them just as aware of what is happening with the business. Some may be content to show up for work and go home. Others may become part of the family. All members of the organization should feel included.


Family members who are not working for you or contributing to the business should not be on the payroll. Even if everyone does a little bit of everything, roles and responsibilities need to be clearly defined. Each person should know their title, job function and compensation. Performance reviews for both family and non-family employees should also be expected.

It is common for non-family employees to feel that family members receive special treatment. This divides the ranks and is never good for morale or job performance. No employee should feel as if a raise or promotion is out of reach simply because they are not related to you. On the other hand, family members may feel as if you are punishing them because of personal history. Just as non-family employees will not want to see relatives being rewarded for being your kin, your relatives will not want to feel persecuted for being related to you. Treat everyone according to the roles you have clearly defined and avoid trouble.


Keep business and personal finances separate. Your business may have evolved from a hobby or side job. Once you start making money, you must look into housing it in a formal legal entity like a limited liability company or a corporation. Any family members that get involved, whether by signing for a loan or chipping in cash, may become personally liable depending on the circumstances.


Owners should meet monthly, quarterly and/or annually for the strategic planning of the business.


It is not uncommon for owners to forget one important question while caught up in running the day-to-day operations. What happens to the business when you are gone? If you pass away or are incapacitated, there must be a succession plan set forth in an agreement.

If you have questions regarding your family business from the perspective of a business law attorney, contact this office for a consultation.

The Law Office of H. Benjamin Sharlin LLC

is owned and operated by H. Benjamin Sharlin and serves all of Mercer County, New Jersey and the surrounding areas. Mr. Sharlin is a bilingual Spanish-speaking attorney who vigorously represents the interests of all his clients.

Call (609) 585-0606 or click the button below to schedule an appointment

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